Volatile week in the stock market, a slow week in terms of corporate news.

Update week 36 2024

While there was little corporate news, the stock markets—and our shares—had a weaker start in September. In August, our stocks also underperformed compared to the markets following the initial volatile week.

Although the figures released by our companies were good or better than expected, at least from my perspective, this is partly because I always try to have as realistic expectations as possible. In case of doubt, I always base my valuation on pessimistic figures.

As a result, I am not often negatively surprised, but the markets operate differently. You can’t make predictions based on the figures and how the stock price reacts in the short term. Good figures can be met with a decline if expectations are even higher, while poor figures might be better than expected, leading to a rise. However, that doesn’t concern us; we focus on years, not quarters.

That doesn’t mean, however, that my patience isn’t tested. I recently wrote on Twitter: I have been an active investor for 25 years, with the last 14 years being full-time. I have considered myself a value investor for 20 years, meaning I focus on buying at a cheap price relative to intrinsic value. Like Warren Buffett and the other investors from Graham & Doddsville who became wealthy. In those 25 years, I have not seen a period where value investing has taken so long to show its results.

When value does emerge today, it is usually because companies are being acquired or something similar. In the past, a low price alone was enough to attract attention. If a company used to grow its book value by about 10% per year and the stock price fell below 0.8x tangible book value, investors were ready to scoop up this bargain. Today, that doesn’t seem to matter.

This situation is advantageous for us to build a solid portfolio, but it also reinforces the importance of having a long-term perspective.

This week: